May 8, 2017 | Policy Brief

North Korea Sanctions Bill Passes First Hurdle

May 8, 2017 | Policy Brief

North Korea Sanctions Bill Passes First Hurdle

The House of Representatives approved the Korean Interdiction and Modernization of Sanctions Act (KIMS) on Thursday. Passed by a vote of 419-1, the bill is expected to easily win Senate approval. The bill complements the North Korea Sanctions and Policy Enhancement Act of 2016, but also enhances inspection authorities and maintains pressure on providers of specialized financial messaging services.

First, the bill clarifies and codifies that U.S. banks must ensure their foreign counterparts are not using their accounts to process transactions for North Korea. For example, from 2009 to 2015, the Dandong Hongxiang network used Chinese banks to process dollar transactions through U.S.-based financial institutions for the benefit of a U.S.- and UN-designated North Korean bank.

Second, it calls for a report on whether Iran is complying with North Korea-related UN Security Council resolutions. The Obama administration sanctioned Iranian officials for Tehran’s missile-related cooperation with North Korea the day after the January 2016 implementation of the Iran nuclear deal, underscoring the deep and long-standing Pyongyang-Tehran relationship on missile development.

Third, the bill mandates a report on UN sanctions implementation. Secretary of State Rex Tillerson mentioned sanctions implementation at Friday’s Security Council session, and any such robust sanctions will be only as good as their implementation. Security Council members must lead by example, but unfortunately half of the non-permanent members have not submitted the required implementation reports.

Fourth, the bill requires the president to levy sanctions against companies and individuals who employ North Korean slave labor. As many as 120,000 North Koreans could be working abroad, and one expert puts the country’s earnings from the practice at some $500 million annually. Washington’s focus on this issue would target both North Korea’s human rights abuses and regime revenue.

Finally, the bill mandates a State Department determination of whether North Korea is a state sponsor of terrorism. President George W. Bush removed North Korea from the list in 2008 as an incentive for Pyongyang to end its nuclear weapons program. The Kim regime’s brazen February nerve-agent assassination of its leader’s half-brother in a Malaysian airport is a reminder of North Korea’s terrorist activities.

Tillerson last week chaired a session of the UN Security Council and called on the international community to suspend diplomatic relations with North Korea given its history of using its embassies for commercial activities, and for selling prohibited nuclear materials. The secretary urged a renewed campaign to isolate Pyongyang from the international financial system, specifically calling out China for aiding and abetting its neighbor’s illicit activity.

The United States should seek partners in its sanctions efforts, but Washington must also lead – and if necessary, act alone – against the Kim regime’s efforts to threaten America and its allies.

Anthony Ruggiero, a senior fellow at the Foundation for the Defense of Democracies, was an advisor to the U.S. delegation to the 2005 rounds of the Six-Party Talks, and spent 17 years in the U.S. government. Follow him on Twitter @_ARuggiero. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.


North Korea Sanctions and Illicit Finance